Boca's industrial heart: Finding a new beat?

The old campus of IBM Corp. in Boca Raton is where the personal computer was…

January 19, 2014|By Anne Geggis, Sun Sentinel

BOCA RATON — More than anywhere else, the northwest sector is ground zero for Boca's big dreams, its meteoric rise from a scrubby agrarian past and its recent, crashing bust.

In this one slice of the city, you'll find about twice as much office space than in Boynton Beach, Delray Beach and Lake Worth combined, according to regional real estate inventory reports.

Inside these hulking structures, landlords are getting the same rents they collected 20 years ago. On the roads that wind around the birthplace of the personal computer — former home of IBM Corp. — signs advertising offices available for lease have sprouted like so many weeds.

But according to the latest reports, things are looking up.

"We're having one of the healthiest upticks we've had in seven years," said Keith O'Donnell, who has worked in Boca commercial real estate for 30 years, including the sell-off of IBM's storied Boca headquarters. "I'm smiling now. How's that?"

With recent changes in the zoning here, some see no reason why Boca can't get its '80s mojo back, and then some.

"We've got the capabilities and the infrastructure to attract more and more corporate headquarters," said Scott Singer, a Boca Raton lawyer who will take his seat on the City Council in March."I'd like us to see us take better steps to market ourselves to companies that want to flee the high taxes and high costs of the Northeast."

Market reports show that last year, Boca's office space leasing activity showed the healthiest growth of any city in Palm Beach County. Comparing year over year, the amount of rented office space in Boca increased almost 100,000 square feet when compared with the previous year, with some new deals as big as 72,000 square feet and some as small as 3,000.

Some of the biggest office leasing deals in the county have been inside what's known as the Arvida Park of Commerce, where IBM once formed the humming heart that fueled the Boca's residential growth. Newsmax Media signed onto 50,107 square feet in late summer. And Connifer Revenue Cycle, a medical billing service, had 2013's biggest office space renewal in the county, for 97,962 square feet, according to CBRE, a national real estate company.

But there's plenty of room for improvement: 523,000 square feet of office space remains vacant in the Arvida Park of Commerce — a bit more than one-quarter of all the office space in the park.

Charlie Hilton, who was IBM's facilities engineer as it expanded Boca's operations from 2,500 to 9,000 employees between1980 and 1985, has his doubts that anything will ever completely fill in all the space that IBM and its spinoffs once occupied.

"The demand just isn't there," he said.

Drive along the park that IBM called home any weekday and it's eerily quiet, however. Jack McCabe of McCabe Research & Consulting, a real estate consulting firm, said the office park was outdated soon after it opened in the early 1980s.

"It's an obsolete concept," he said of single-use developments such as IBM's former home. "We're going to see many more of the new urbanization designs [which combine uses in one place]."

With an eye toward expanding the aging industrial center's uses, the City Council last June designated the area a "planned mobility" center.

According to the new rules, up to 2,500 residential units can be built there. Law, accounting and general use offices can get space in this area. Before that, only corporate headquarters were allowed and at least 5,000 square feet had to be rented. Now as little as 3,000 square feet can be rented.

"Generally, the economics are coming back and people are moving," he said. "And people want to live where they work."

Those changes would allow the northwest sector to become a place where people can walk to lunch or to their apartment. It will also put to the test the contention by some Boca developers that companies have been reluctant to locate in the city because of the lack of affordable housing. Market studies show about 90 percent of the employees who work in Boca Raton commute from another city.

"The business community would have liked for it to have happened more quickly, but we are finally moving forward," said Troy McClellan, executive director of the Greater Boca Raton Chamber of Commerce.

But there is plenty of concern among residents that getting around is going to be getting more difficult as more people move in to the northwest section.

"What I am fearing is that they are overloading the roads," said Al Solomon, who is retired from the garment business in New York City. He said he's seen traffic backed up five blocks along the city's main east-west thoroughfare, Palmetto Park Road.